United
States


Securities
and Exchange Commission
 Washington,
DC 20549
 
 FORM
10-QSB
 
 QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 SECURITIES
EXCHANGE ACT OF 1934
 
 
 For the
quarterly period ended December
31, 2007
 
 Commission
File Number 000-28789
 
 
 Falcon Ridge Development
Inc.
 
 (Exact
name of registrant as specified in its charter)
 
 
 Nevada
              
              84-1461919(State
      or other jurisdiction of incorporation)
              
              (IRS
      Employer File Number)5111 Juan Tabo Boulevard N.E. Albuquerque, New
      Mexico
              
              87111(Address
      of principal executive offices)
              
              (zip
      code)
  (702) 386-5379
 (Registrant's
telephone number, including area code)
 
 
 Check
whether the issuer: (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports); and (2) has been subject
to such filing requirements for the past 90 days Yes
[X]     No []
 
 
 Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act)  Yes
[ ]No
[X]
 
 
 State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date: 41,674,337shares of common
stock.
 
 Transitional
Small Business Disclosure Format (check one): Yes [ ] No [X]
 
  
   
 TABLE
OF CONTENTS
 
 PagePART
      I- FINANCIAL INFORMATIONItem
      1. Financial Statements.
              
              3Consolidated
      Balance Sheet (unaudited)
      at December 31, 2007
                &
      September 30, 2007
              
              3Consolidated
      Statements of Operations (unaudited), for the three
                months  ended
      December 31, 2007 and 2006
              
              4Consolidated
      Statements of Cash Flows (unaudited) , for the three
                months
      ended December 31, 2007 and 2006
              
              5Notes
      to Consolidated Financial Statements
              
              6Item
      2. Management's Discussion and Analysis or Plan of
    Operation.
              
              19Item
      3. Controls and Procedures
              
              23PART
      II - OTHER INFORMATIONItem
      1. Legal Proceedings.
              
              25Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
              
              25Item
      3. Defaults Upon Senior Securities.
              
              25Item
      4. Submission of Matters to a Vote of Security Holders.
              
              25Item
      5. Other Information.
              
              25Item
      6. Exhibits and Reports on Form 8-K.
              
              26Signatures
              
              27




-
2 -
 
 FALCON
RIDGE DEVELOPMENT, INC,
  Consolidated
Balance Sheet
 December
31, 2007 and September 30, 2007
  Assets(unaudited)Cash
                
                $
                2,559
                
                
                $
                74,521Fixed
      assets, net of accumulated depreciation
                
                
                52,176
                
                
                
                32,787Real
      estate held for development and sale
                
                
                3,176,205
                
                
                
                3,175,984Total
      assets
                
                $
                3,230,940
                
                
                $
                3,283,292Liabilities
      and Shareholders' DeficitLiabilitiesAccounts
      payable
                
                $
                489,608
                
                
                $
                444,523Notes
      payable related parties
                
                
                1,136,074
                
                
                
                1,136,074Note
      payable
                
                
                1,360,000
                
                
                
                1,350,000Retainage
      payable
                
                
                90,000
                
                
                
                90,000Accrued
      interest
                
                
                162,840
                
                
                
                120,216Accrued
      expenses
                
                
                8,637
                
                
                
                2,587Shareholder
      payable
                
                
                2,000
                
                
                
                —Preferred
      Shares subject to manadatory redemption
                
                
                485,000
                
                
                
                485,000Total
      liabilities
                
                
                3,734,159
                
                
                
                3,628,400Shareholders'
      deficitWarrants
      issued for services
                
                
                (674,857
                )Preferred
      stock,Class A  .0001 par value,400,000
      shares authorized, 160,000 shares issued andoutstanding
                
                
                400,000
                
                
                
                400,000Common
      stock, $0.001 par value, 900,000,000 sharesauthorized,
      18,459,337 shares issued andoutstanding
                
                
                18,809
                
                
                
                18,459Additional
      paid-in capital
                
                
                3,070,404
                
                
                
                2,013,447Accumulated
      deficit
                
                
                (3,317,575
                )
                
                
                (2,777,014
                )Total
      Liabilities and Shareholders' Deficit
                
                
                (503,219
                )
                
                
                (345,108
                )$
                3,230,940
                
                
                $
                3,283,292
  See
accompanying notes to consolidated financial statements
  -
3 -
  
 FALCON
RIDGE DEVELOPMENT, INC.
  Consolidated
Statement of Operations
 (Unaudited)
  Three
      Months
                
                
                Three
      Monthsended
                
                
                endedDecember
      31,
                
                
                December
      31,2007
                
                
                2006Net
      sales
                
                $
                47,310
                
                
                $
                -Cost
      of goods sold
                
                
                18,950
                
                
                
                -Selling,
      general and administrative expenses
                
                
                565,792
                
                
                
                153,934Total
      operating expenses
                
                
                584,742
                
                
                
                153,934Other
      income:Loss
      before provision for income taxes
                
                
                537,432
                
                
                
                153,934Income
      taxes
                
                
                -
                
                
                
                -Net
      Loss
                
                $
                537,432
                
                
                $
                153,934Loss
      per share
                
                $
                -
                
                
                $
                -Weighted
      average number of shares outstanding
                
                
                18,459,337
                
                
                
                3,117,642
  See
accompanying notes to consolidated financial statements
  -
4 -
  FALCON
RIDGE DEVELOPMENT, INC.
  Consolidated
Statements of Cash Flows
 (Unaudited)
   Three
      Months
                
                
                Three
      Monthsended
                
                
                endedDecember
      31,
                
                
                December
      31,2007
                
                
                2006Cash
      flows from operating activities:Net
      income/loss
                
                $
                (537,432
                )
                
                $
                (153,934
                )Adjustments
      to reconcile net loss to net cashStock
      issued for services
                
                
                157,500
                
                
                
                —Warrants
      expensed
                
                
                264,570used
      by operating activities:Depreciation
                
                
                2,394
                
                
                
                1,577Changes
      in operating assets and liabilities,Real
      estate held for development and sale
                
                
                (221
                )
                
                
                (100,851
                )Accounts
      payable
                
                
                45,083
                
                
                
                131,550Accrued
      interest
                
                
                42,624
                
                
                
                —Accrued
      liabilities
                
                
                6,050
                
                
                
                16,235Stock
      based compensation
                
                
                
                
                
                
                10,250Net
      cash (used in) provided byoperating
      activities
                
                
                (19,432
                )
                
                
                (95,173
                )Cash
      flows from investing activities:Acquisition
      of fixed assets
                
                
                (21,783
                )
                
                
                —Net
      cash used ininvesting
      activities
                
                
                (21,783
                )
                
                
                —Cash
      flows from financing activities:Increase
      (Decrease) in related party notes payable
                
                
                —
                
                
                
                51,366Increase
      (Decrease) notes payable
                
                
                10,000
                
                
                
                200,000Proceeds
      from shares to be issued
                
                
                2,000
                
                
                
                —Net
      cash from financing
      activities
                
                
                12,000
                
                
                
                251,366Net
      change in cash
                
                
                (29,215
                )
                
                
                156,193Cash:Beginning
      of period
                
                
                74,521
                
                
                
                3,754End
      period
                
                $
                45,306
                
                
                $
                159,947Supplemental
      disclosure of cash flow information:Cash
      paid during the year for:Income
      taxes
                
                $
                —
                
                
                $
                —Interest
                
                $
                5,200
                
                
                $
                29,778SIGNIFICANT
      NON-CASH ACTIVITIESWarrants
      issued
                
                $
                899,809
                
                
                $
                -Stock
      issued for services
                
                
                157,500
                
                
                
                -Total
      non-cash activities
                
                $
                1,057,309
                
                
                $
                -
  See
accompanying notes to consolidated financial statements
  -
5 -
   FALCON
RIDGE DEVELOPMENT, INC.
 
 Notes
to Consolidated Financial Statements
 (Unaudited)
  
 (1)  
Summary of Significant Accounting Policies
 
 Organization,
Shell Merger and Principles of Consolidation
 
 Organization
 
 Falcon
Ridge Development, Inc. ("FRDI" or the "Company") is engaged in the real estate
industry and acquires tracts of raw land and develops them into residential lots
for sale to homebuilders. In addition, FRDI plans to expand its operations into
the homebuilding business. These operations are predominantly located in the
City of Rio Rancho, New Mexico and Belen, New Mexico. Since inception, the
Company has developed one property known as Sierra Norte.
 
 Going
Concern
 
 The
Company experienced significant operating losses during the three ended December
31, 2007 and 2006, of $540,561 and $153,934 respectively.  The Company
has a working capital deficit and implementation of its business plan is
dependent upon its ability to raise additional capital.  These matters
raise substantial doubt about the Company’s ability to continue as a going
concern. Management believes that it will be successful in raising additional
capital and that it has assets available to securitize debt should the Company
look to borrow.  The accompanying financial statements do not include
any adjustments relating to the recoverability and classification of the
recorded asset amounts or the amounts and classification of liabilities that
might be necessary should the Company be unable to continue in
existence.
 
 Shell
Merger
 
 On May
20, 2005, Sierra Norte LLC ("SNLLC") exchanged certificates representing 100
percent of its equity securities for 100,000,000 shares of the common stock of
Pocketspec Technologies, Inc. (PTI), a public shell company. The acquisition has
been treated as a recapitalization of SNLLC, a New Mexico limited liability
company, with PTI the surviving legal entity. Since PTI had, prior to the
merger, minimal assets, (consisting of cash) and no operations, the
recapitalization has been accounted for as the sale of 37,265,372 shares of
common stock for the net assets of PTI. After the closing of the acquisition,
there were 137,265,372 shares of common stock of the Company issued and
outstanding. PTI was incorporated under the laws of Colorado in 1998. In June
2005, PTI changed its domicile to Nevada and its name to Falcon Ridge
Development Inc.
 
 -
6 -
 
 FALCON
RIDGE DEVELOPMENT, INC.
 
 Notes
to Consolidated Financial Statements
 (Unaudited)
 
 SNLLC was
deemed to be the acquirer (for accounting purposes) in the reverse acquisition
and, consequently, the assets and liabilities and historical operations that are
reflected in the accompanying financial statements are those of SNLLC and are
recorded at the historical cost basis of SNLLC.
 
 In
connection with the merger, PTI sold to a group of its shareholders, PTI's color
comparison devices business in exchange for an indemnification from liabilities
by these investors. These shareholders assumed the color comparison devices
business including its liabilities. The sale was consummated between related
parties. Accordingly, the sale was booked as a capital transaction and no gain
or loss on the transaction was recorded.
 
 Since
incorporation in 1998, PTI has conducted three businesses. Originally PTI was in
the retail arts and crafts industry. PTI then transitioned into the real estate
development business, where it acquired and developed real estate properties for
its own account, primarily in Colorado. Finally, PTI became a technology
company. In 1999, PTI filed a registration statement on Form 10-SB with the U.S.
Securities and Exchange Commission to become a reporting company under Section
12G of the Securities and Exchange Act of 1934.
 
 Principles of
Consolidation
 
 The
consolidated financial statements include the accounts of Falcon Ridge
Development, Inc. and its wholly owned subsidiaries SNLLC and Spanish Trails LLC
(STLLC) (together, the "Company"). Intercompany transactions and balances have
been eliminated in the consolidation.
 
 Use of
Estimates
 
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
 
 -
7 -
 
 FALCON
RIDGE DEVELOPMENT, INC.
 
 Notes
to Consolidated Financial Statements
 (Unaudited)
 
 Revenue Recognition on Sales
of Real Estate
 
 The
profit on sales of real estate is accounted for in accordance with the
provisions of SFAS No. 66, "Accounting for Sales of Real Estate." The Company
recognizes revenue from the sale of real estate at the time the sale is closed
and the title is transferred from the Company to the buyer.
 
 Cash and Cash
Equivalents
 
 The
Company considers all highly liquid securities with original maturities of three
months or less when acquired to be cash equivalents. The Company had no cash
equivalents at December 31, 2007 and 2006.
 
 Real Estate Held for
Sale
  The
carrying value of land and development includes the initial acquisition costs of
land, improvements thereto, and other costs incidental to the acquisition or
development of land. These costs are allocated to properties on a relative sales
value basis and are charged to costs of sales as specific properties are sold.
Due to the nature of the business, land and development costs have been
classified as an operating activity on the consolidated statement of cash
flows.
 
 Impact
credits received from the negotiated settlement with the City of Rio Rancho are
offset against land development costs.
 
 The
company reviews the fair value less costs to sell of land under development at
the end of each reporting cycle and where the carrying value of the asset is not
recoverable and exceeds its fair value an impairment loss will be
recognized.
  Interest
 
 The
Company capitalizes interest costs to real estate held for resale during
development and construction. Capitalized interest is charged to cost of sales
as the related lots are delivered to the buyer.
 
 Fixed Assets and
Depreciation
 
 Fixed
assets are recorded at cost. Expenditures that extend the useful lives of assets
are capitalized. Repairs, maintenance and renewals that do not extend the useful
lives of the assets are expensed as incurred. Depreciation is provided on the
straight-line method over the following estimated useful lives: software, 5
years ; equipment, 5 years.
 
 -
8 -
 
 FALCON
RIDGE DEVELOPMENT, INC.
 
 Notes
to Consolidated Financial Statements
 (Unaudited)
 
 
 Earnings (loss) per Common
Share
 
 Basic net
income per share is computed by dividing the net income available to common
shareholders (the numerator) for the period by the weighted average number of
common shares outstanding (the denominator) during the period. The computation
of diluted earnings is similar to basic earnings per share, except that the
denominator is increased to include the number of additional common shares that
would have been outstanding if potentially dilutive common shares had been
issued.
 
 At
December 31, 2007, there was no variance between basic and diluted loss per
share as the convertible preferred stock outstanding, if converted, would be
anti-dilutive.
 
 Impairment or Disposal of
Long-Lived Assets
 
 The
Company evaluates real estate projects and other long-lived assets on an
individual basis for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable in
accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" and SFAS 67 “Accounting for Costs and Initial Rental
Operations of Real Estate Projects.” An asset is considered impaired if its
carrying amount exceeds the future net cash flow the asset is expected to
generate or its net realizable value. If an asset is considered to be impaired,
the impairment to be recognized is measured by the amount by which the carrying
amount of the asset exceeds its fair market value. We assess the recoverability
of our real estate projects, long-lived and intangible assets by determining
whether the unamortized balances can be recovered through undiscounted future
net cash flows of the related assets. The amount of impairment, if any, is
measured based on projected discounted future net cash flows. When impairment
exists the carrying value of the asset will be reduced by an allowance for the
amount of the impairment. There is no impairment in 2007 or 2006.
 
 Advertising
Expenses
 
 The
Company expenses advertising expenses as incurred. Advertising expense for the
three months ended December 31, 2007 and 2006 were $715 and $3,011
respectively.
 
 
 -
9 -
  
 FALCON
RIDGE DEVELOPMENT, INC.
  Notes
to Consolidated Financial Statements
 (Unaudited)
 
 Stock-based
Compensation
 
 The
Company adopted Statement of Financial Accounting Standards No. 123 (revised
2004), Share-Based Payment (SFAS 123R), effective January 1, 2006. SFAS 123R
requires the recognition of the fair value of stock-based compensation in net
income. The Company has elected the modified prospective transition method for
adopting SFAS 123R. Under this method, the provisions of SFAS 123R apply to all
awards granted or modified after the date of adoption. In addition, the
unrecognized expense of awards not yet vested at the date of adoption,
determined under the original provisions of SFAS 123, shall be recognized in net
income in the periods after the date of adoption. The Company had no unvested
awards at December 31, 2007 and 2006 respectively.
 
 Income
Taxes
 
 Income
taxes are accounted for using the asset and liability method. Under this method,
deferred income tax assets and liabilities are recognized for the future tax
consequences attributable to temporary differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred income tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which these temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date. A valuation
allowance is provided for deferred tax assets that are not expected to be
recovered from future operations.
 
 In tax
year December 31, 2005, the Company operated as a partnership through May 20,
2005 and as a "c" corporation for the period May 21, 2005 through December 31,
2005 and therefore was exempt from taxation; instead, its earnings and losses
are included in the personal returns of the members and taxed depending on the
individual's personal tax situation. The Company is the sole member of its two
subsidiaries and consequently includes their activity in its return on a
consolidated basis. The Company has a tax loss of approximately $1,037,829 which
is available to reduce taxable income in future years. Use of the loss will
expire in 2027.
 
 Financial Instruments and
Concentration of Credit Risk
 
 The
carrying amounts of the Company's financial assets and liabilities, including
cash, accounts payable, and preferred shares with mandatory redemption at
December 31, 2007, approximate fair value because of the short maturity of these
instruments. The carrying amount of the Company's notes payable approximates
fair value at December 31, 2007, since the notes are at floating rates or fixed
rates that approximate current market rates for notes with similar risks and
maturities.
  -
10 -
 
 
 FALCON
RIDGE DEVELOPMENT, INC.
 
 Notes
to Consolidated Financial Statements
 (Unaudited)
 
 For the
three month period ending December 31, 2007  $35,903 or 75.8% of the
Company's sales were from ten homebuilders and the remaining $10,575 or 24.2%
came from the Realty division.
 
 
 Preferred Shares subject to
mandatory redemption
 
 The
features of our Series B Preferred Stock and determined that it falls within
SFAS 150 “Accounting for Certain Financial Instruments with Characteristics of
both Liabilities and Equity”. Due to redemption features of the securities, the
preferred shares are being classified as a liability in these financial
statements. The securities give the holder the option of a net cash settlement
or a settlement in common share based on a conversion rate.  The value
of the liability is fixed at the stated value of $485,000.  However,
the number of common shares into which the preferred shares are convertible is
inversely related to changes in the Company’s common stock.  Although
the potential conversion could conceivably require the Company to issue a number
of shares in excess of its authorized limit, the Company does not believe that
its liability recorded at December 31, 2007, associated with the Series B
preferred stock is appropriate in that such obligation would not exceed the
aggregate stated value.
 New Accounting
Standards
 
 SFAS No.
151, "Inventory Costs," is effective for fiscal years beginning after June 15,
2006. This statement amends the guidance in Accounting Research Bulletin ("ARB")
No. 43, Chapter 4, Inventory Pricing, to clarify the accounting for abnormal
amounts of idle facility expense, freight, handling costs, and wasted material
(spoilage). The adoption of SFAS 151 did not have a material impact on the
Company's financial statements.
 
 SFAS No.
152, "Accounting for Real Estate Time-Sharing Transactions," is effective for
fiscal years beginning after June 15, 2005. This statement amends SFAS No. 66,
Accounting for Sales of Real Estate, to reference the financial accounting and
reporting guidance for real estate time-sharing transactions that is provided in
American Institute of Certified Public Accountants Statement of Position 04-2,
Accounting for Real Estate Time-Sharing Transactions. The adoption of SFAS No.
152 did not have a material impact on the Company's
 financial
statements.
 
 SFAS No.
123(R), "Share-Based Payment," replaces SFAS No. 123, "Accounting for
Stock-Based Compensation," and supersedes APB Opinion No. 25, "Accounting for
Stock Issued to Employees." This statement requires that the compensation cost
relating
  -
11 -
  FALCON
RIDGE DEVELOPMENT, INC.
 
 Notes
to Consolidated Financial Statements
 (Unaudited)
 
  to
share-based payment transactions be recognized in the financial statements. The
Company is required to apply this statement in the first interim period that
begins after December 15, 2005. The adoption of SFAS No. 123(R) did not have a
material impact on the Company's financial.
 
 SFAS No.
153, "Exchanges of Non-monetary Assets" - an amendment of APB Opinion No. 29, is
effective for fiscal years beginning after June 15, 2005. This statement
addresses the measurement of exchange of non-monetary assets and eliminates the
exception from fair-value measurement for non-monetary exchanges
 of
similar productive assets in paragraph 21(b) of APB Opinion No. 29, "Accounting
for Non-monetary Transactions," and replaces it with an exception for exchanges
that do not have commercial substance. The adoption of SFAS No. 153 did not have
a material impact on the Company's financial statements.
 
 FIN No.
46(R) revised FIN No. 46, "Consolidation of Variable Interest Entities,"
requiring the consolidation by a business of variable interest entities in which
it is the primary beneficiary. The adoption of FIN No. 46 did not have an impact
on the Company's financial statements.
 
 The EITF
reached a consensus on Issue No. 04-8, "The Effect of Contingently Convertible
Debt on Diluted Earnings Per Share" ("EITF 04-8"), which addresses when the
dilutive effect of contingently convertible debt instruments should be included
in diluted earnings (loss) per share. EITF 04-8 is effective for reporting
periods ending after December 15, 2004. The adoption of EITF 04-8 did not have
an impact on diluted earnings (loss) per share.
 
 (2)
Related Party Transactions
 
 The
Company conducts its operations in a building rented by an affiliate. During the
three months ended December 31, 2007 and 2006, the Company recorded rent expense
of $16,500 and $15,750, respectively. At December 31, 2007 the Company owed rent
and utilities in the amount of $ 36,683, which is included in accounts
payable.
 
 The
Company's affiliate pays certain expenses on its behalf. The Company reimburses
these expenses paid on its behalf by the affiliate at actual cost. Overhead
expenses and indirect labor incurred by the affiliate are allocated to the
Company based on management-approved estimates of time and effort. The Company
reviews the estimated rate from time-to-time.
 
 -
12 -
  FALCON
RIDGE DEVELOPMENT, INC.
 
 Notes
to Consolidated Financial Statements
 (Unaudited)
 
   Indebtedness
to related parties consisted of the following at December 31, 2007:
 
 Note
      payable to Karen Duran &/or Fred Montano, interest at Published Prime
      plus 3%, principal and interest payable in monthly installments of $20,
      000.00 plus interest.Total
      financing under the agreement is $1,136,074.40
              
              $
              1,136,074.40
  (3) Fixed
Assets
 
 Fixed
assets consist of the following at December 31, 2007:
 
 Cost
              
              
              Accumulated
      DepreciationComputer
      Software & Hardware
              
              $
              56,845
              
              
              $
              8,660Equipment
              
              
              7,981
              
              
              
              3,990Total
              
              $
              64,825
              
              
              $
              12,650
 
 Depreciation
expense is included in selling, general and administrative expenses in the
accompanying financial statements. For the three months ended December 31, 2007
and 2006 the Company recorded depreciation expense of $2,394 and $1,577
respectively.
 
 (4) Real
Estate Operations
 
 The
Company completed development of Sierra Norte I and II subdivisions in Rio
Rancho, New Mexico in 2006. The Company is in the process of developing
approximately 139 acres of raw land in the Belen, New Mexico referred to as
"Spanish Trails." Spanish Trails consists of land platted into approximately 517
home sites. Home sites will be sold to different builders or developed by the
Company.
 
 Real
estate held for resale, consists of the following at December 31,
2007:
 
 Real
      estate held for development and sale
              
              $
              3,176,205
 
 
 -
13 -
 
 FALCON
RIDGE DEVELOPMENT, INC.
 
 Notes
to Consolidated Financial Statements
 (Unaudited)
 
 
 (5)
Note Payable
 
 Note
payable consists of the following at December31,
2007:
 
 Note
      payable Gerry Berg, with interest at 12 percent six (6) month note with
      converstion rights at 50% of bid price at time of
converstion.
              
              $
              10,000Note
      payable Freedom Financial Note amount $200,000.00, interest payable at 10%
      per annum, converstion rights at renewable with 2% renewal fee,
      Converstion option at $0.75
              
              $
              200,000Note
      payable Metro Loan Corp, with interest at 12 percent interest only
      payments in monthly installments of $11,100.00 collateralized by a First
      Mortgage due 2008Total
      financing under the agreement is $1,150,000.00
              
              $
              1,150,000Note
      payable Karen Duran and/or Fred Montano, with interest at Prime as stated
      in Wall Street Journal plus 3 percent payments in monthly installments of
      $20,000.00 plus accrued interest collateralized by a Second Mortgage due
      2008
              
              $
              1,136,074.40Total
              
              $
              2,496,074
 
  
 -
14 -
 
 FALCON
RIDGE DEVELOPMENT, INC.
 
 Notes
to Consolidated Financial Statements
 (Unaudited)
   (6)
Warrants
 
 On
October 8, 2007, the Company issued 2,000,000 warrants with an estimated value
of $ 899,809 to Redwood Consulting LLC. The warrants have an exercise price of
$0.50 per share, the warrants become exercisable either twelve months after the
underlying common stock issuable in the exercise of these warrants is declared
registered and effective by the SEC in the companies current SEC registration
statement; or 5:30 P.M.Pacific Daylight Savings Time on October 8, 2015. The
warrants expire 5:30 PM Pacific Daylight Savings Time on October 8, 2015, or
twelve months after becoming exercisable or. The Company has recorded consulting
fees relating to these options of $ 221,823.  As of the date of this
report, none of the warrants have vested.
 
 The fair
value of these options was estimated at the date of grant using the
Black-Scholes option-pricing model with dividend yield of 0%; expected
volatility of 169%; risk-free interest rate of 4.12%; and expected life of 8
years.
 
 A summary
of stock option and warrant activity for all plans follows:
 Outstanding
      Options
                
                Options
                  Outstanding
                
                
                Warrants
      Outstanding
                
                
                Exercise
      PriceGranted
                
                
                -
                
                
                
                2,000,000
                
                
                $
                0.50Exercised
                
                
                -
                
                
                
                -Canceled
                
                
                -
                
                
                
                -Balance,
      December 31, 2007
                
                
                -
                
                
                
                2,000,000
                
                
                $
                0.50
 
 
 Following
      is a summary of the status of fixed options and warrants
      outstanding at December 31, 2007:Outstanding
      Options and Warrants
                Exercisable
      Options and WarrantsExercise
      Price Range
                Number
                Weighted
      Average
                  Remaining
      Contractual Life
                Weighted
      Average Exercise Price
                Number
                  Exercisable
                Weighted
      Average Exercise Price$
      0.50
                2,000,000
                7.8
      years
                $
      0.50
                -
                $
      0.00
 
 
 -
15 -
  FALCON
RIDGE DEVELOPMENT, INC.
 
 Notes
to Consolidated Financial Statements
 (Unaudited)
 
 (7)
Income Taxes
 
 A
reconciliation of U.S. statutory federal income tax rate to the effective rate
follows for the three month period ending December 31, 2007:
 
 U.S. statutory federal rate
              
              
              20.000
              %State
      income tax rate
              
              
              4.80
              %Net
      operating loss for which no tax benefit is currently
    available
              
              
              -24.800
              %0.00
              %
 
 For the
three month period ending December 31, 2007 the company estimated that the
company would have a loss for income taxes purposes and therefore reported no
provision.
 
 (8)   
Shareholders' Deficit
 
 Preferred
Stock
 
 On July
20, 2005, the Company established Series A Convertible Preferred Shares and
authorized 400,000 shares. The preferences are as follows:
 
 ·
              Shares
      are non-cumulative with a preference over common shares if and when a
      dividend is declared.
 
 ·
              Shares
      are convertible into common stock at any time on the basis of 100 common
      shares for 1 share of preferred stock. This conversion rate is subject to
      adjustments for forward or reverse splits or other capitalizations. The
      option was of no intrinsic benefit, at the commitment date, to the
      preferred shareholder.
  ·
              Shares
      have a priority over common shares and other convertible
      preferred shares upon liquidation.
  ·
              Shares
      are callable at any time by the Company at the original purchase price.
      The Preferred Shareholders will have thirty days thereafter to convert to
      common stock.
   -
16 -
  FALCON
RIDGE DEVELOPMENT, INC.
 
 Notes
to Consolidated Financial Statements
 (Unaudited)
 
 
 (9)   
Preferred Shares subject to mandatory redemption
  The
features of our Series B Preferred Stock and determined that it falls within
SFAS 150 “Accounting for Certain Financial Instruments with Characteristics of
both Liabilities and Equity”. Due to redemption features of the securities, the
preferred shares are being classified as a liability in these financial
statements. The securities give the holder the option of a net cash settlement
or a settlement in common share based on a conversion rate.  The value
of the liability is fixed at the stated value of $485,000.  However,
the number of common shares into which the preferred shares are convertible is
inversely related to changes in the Company’s common stock.  Although
the potential conversion could conceivably require the Company to issue a number
of shares in excess of its authorized limit, the Company does not believe that
its liability recorded at December 31 2007, associated with the Series B
preferred stock is appropriate in that such obligation would not exceed the
aggregate stated value.
  On April
15, 2006, the Company established Series B Convertible Preferred Shares and
authorized 400,000 shares. The preferences are as follows:
 
 ·
              Shares
      are non-cumulative with a preference over common shares if and when a
      dividend is declared.
 
 ·
              Investor
      will receive a dividend of 12% per annum payable monthly for a period of
      eighteen months from the date of
purchase.
 
 ·
              Shares
      are convertible into common stock at any time on the basis of 75% of the
      average current bid price for the preceding 20 days of the Company's
      receipt of notice to convert. This conversion rate is subject to
      adjustments for forward or reverse splits or other capitalizations. The
      option was of no intrinsic benefit, at the commitment date, to the
      preferred shareholder.
 
 ·
              Shares
      have a priority over common shares upon
  liquidation.
 
 ·
              Shares
      are callable by the Company at any time after 12 months of issuance of
      Preferred B shares at the original purchase price. The Preferred
      Shareholders will have sixty days thereafter to convert to common stock.
      The shares will be repurchased after eighteen months for the original
      issue price.
   -
17 -
  FALCON
RIDGE DEVELOPMENT, INC.
 
 Notes
to Consolidated Financial Statements
 (Unaudited)
 
 
 (10)   Subsequent
events
 
 On February 5, 2008 the Company issued
10,000,000 restricted shares at $0.10 to Fred Montana for his services valued at
$1,000,000.
 
 On February 5, 2008 the Company issued
10,000,000 restricted shares at $0.10 to Karen  Duran for her services
valued at $1,000,000.
 
 On February 5, 2008 the Company issued
115,000 restricted shares at $0.10 to Gerry Berg for his services valued at
$11,500.
 
 On February 5, 2008 the Company issued
250,000 restricted shares at $0.10 to Troy Duran for his services valued at
$25,000.
 
 On February 5, 2008 the Company issued
250,000 restricted shares at $0.10 to Sebastian Ramirez for his services valued
at $25,000.
 
 On February 5, 2008 the Company issued
2,250,000 restricted shares at $0.10 to Periscope  for consulting
services valued at $225,000.
 
 
 
  -
18 -
  ITEM
2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.
 
 
 The
following discussion of our financial condition and results of operations should
be read in conjunction with, and is qualified in its entirety by, the
consolidated financial statements and notes thereto included in Item 1 in this
Quarterly Report on Form 10-QSB. This item contains forward-looking statements
that involve risks and uncertainties. Actual results may differ materially from
those indicated in such forward-looking statements.
 
 Forward-Looking
Statements
 
 This
Quarterly Report on Form 10-QSB and the documents incorporated herein by
reference contain forward-looking statements that have been made pursuant to the
provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are based on current expectations, estimates, and
projections about our industry, management beliefs, and certain assumptions made
by our management. Words such as "anticipates," expects," "intends," "plans,"
"believes," "seeks," "estimates," variations of such words, and similar
expressions are intended to identify such forward-looking statements. These
statements are not guarantees of future performance and are subject to certain
risks, uncertainties, and assumptions that are difficult to predict; therefore,
actual results may differ materially from those expressed or forecasted in any
such forward-looking statements. Unless required by law, we undertake no
obligation to update publicly any forward-looking statements, whether as a
result of new information, future events, or otherwise. However, readers should
carefully review the risk factors set forth in other reports and documents that
we file from time to time with the Securities and Exchange Commission,
particularly our Annual Reports on Form 10-KSB and any Current Reports on Form
8-K.
  Overview and
History
 
 We are a
Nevada corporation with two subsidiaries, Sierra Norte, LLC ("Sierra Norte") and
Spanish Trails, LLC ("Spanish Trails"). We are in the real estate industry and
acquire tracts of raw land and develop them into residential lots for sale to
homebuilders. We plan to expand our operations in 2007 into homebuilding on our
Spanish Trails lots. Our executive offices are located in the Albuquerque, New
Mexico area.
 
 On May
20, 2005, we completed a reverse acquisition transaction. We acquired Sierra
Norte, a New Mexico limited liability company, which thereby became our
wholly-owned subsidiary. Sierra Norte is a land development company in the
Albuquerque, New Mexico area. Formerly we were a technology company which was in
the business of developing and marketing color comparison devices. We acquired
Spanish Trails on July 6, 2005 as discussed below.
  -
19 -
  
 As a
result of the Sierra Norte acquisition, the former security holders of Sierra
Norte acquired a majority of our outstanding shares of common stock. For
accounting purposes, Sierra Norte has been deemed to be the acquirer in the
acquisition and, consequently, the assets, liabilities and historical operations
that are reflected in our financial statements are those of Sierra Norte, which
are recorded at the historical cost basis of Sierra Norte. The reverse
acquisition was consummated under Colorado law pursuant to an Agreement and Plan
of Reorganization dated May 20, 2005.
 
 On
July 6, 2005, we entered into an exchange of securities whereby we acquired 100%
of the ownership of Spanish Trails, in exchange for the issuance of a total of
614,882,069 (pre-reverse split) of our common shares. As a result of the Spanish
Trails acquisition, the former security holders of Spanish Trails acquired a
majority of our outstanding shares of common stock, but we did not have a change
of control because the owners of a majority of Spanish Trails were the executive
officers and majority shareholders of the Company. After the exchange,
752,262,441 (pre-reverse split) shares of common stock were issued and
outstanding.
 
 Also, on
July 6, 2005 we reincorporated our company to Nevada from Colorado and changed
our name to Falcon Ridge Development Inc., after shareholder approval. In
connection with the name change, we changed to a new trading symbol,
FLRD.BB.
 
 On
August 16, 2006 we affected a 1 for 200 reverse split of our common stock. This
reduced the outstanding shares from 752,262,441 to 3,761,312 and we changed our
trading symbol to FCNR.BB.
 
 Our
Spanish Trails project is progressing through local real estate governmental
clearance toward final approval of our platting plan. We anticipate the process
should be completed by mid-2008. When our platting plan receives final approval,
we will be able to begin construction of the first phase of development of
approximately 517 lots for single family homes. Considerable up front costs in
any real estate platting project must first be incurred and paid for, thus in
the early stages of our real estate projects significant amounts of capital can
be required until platting occurs, and lots are improved and sold. Predictably,
greater revenues will be achieved as soon as a portion of the lots are improved
and sold. When the lot development has been completed and accepted by the
Valencia County, New Mexico, engineers and construction of the lots completed,
the sale of those lots will be funded and closed. It is also our intention to
initiate a home building division on some of the remaining developed Spanish
Trails project lots not sold to homebuilders. We expect to have initial models
open in the Spring of 2008. The sale of homes and, consequently, the pace of
construction, will be determined by the rate of market absorption.
 
  -
20 -
  Results of
Operations
 
 Three Month Period Ending
December 31, 2007 Compared to Three Month Period Ending December 31,
2006
 
 We had
revenue of 47,310 for the three month period ending December 31, 2007 compared
to revenues of $-0- for the three months ending December 31, 2006. This increase
was primarily attributable to our mortgage division. The Mortgage division was
incorporated in the  State of New Mexico and its Certificate of
Organization was issued on or about August 3, 2007 under the name Falcon Ridge
Investments, LLC. It has been operating since as a wholly owned subsidiary of
Falcon Ridge Development, Inc. We are in the process of exploring how to expand
personel, locations and liscensing in other States.
 
 Our costs
of sales for the three month period ending December 31, 2007 was $18,950
compared to costs of sales of $-0- for the three month period ending December
31, 2006.   Our selling, general and administrative expenses for
the three month period ending December 31, 2007 were $584,742, compared to
selling, general and administrative expenses of $153,934 for the three month
period ending December 31, 2006. The major components of these expenses are
consulting fees, salaries, payroll taxes and professional fees. Since late in
the second quarter of the prior year we have expensed and increased amount of
indirect payroll which results in a general increase in general and
administration expenses. We have significantly expanded our operations as a
public company in 2007. This is reflected in the increased
overhead.
 
 Our
principal source of revenue in the near term is expected to be from 139 acres of
land we own in the Spanish Trails project, which is being developed as discussed
above. In this development, we plan to build homes as well as develop and
construct the community. The timeframe over which developed lots and or homes
will be sold may be several years. We are negotiating on properties in other
States for future growth of the company.
 
 Liquidity and Capital
Resources
 
 At December 31, 2007 our cash position was $2,559.
 
 Our net
cash used in operating activities was $62,179 for the three month ending
December 31, 2007, compared to net cash used by operating activities of $95,173
for the same period 2006.
 
 Our net
cash used by investing activities was $ 21,783 for the three month period ending
December 31, 2007, compared to $-0- of net cash used by investing activities for
the three month period ending December 31, 2007.
  -
21 -
  
  Our net
cash provided by financing activities was $12,000 for the three month period
ending December 31, 2007, compared to $251,366 of net cash provided by financing
activities for the three month period ending December 31, 2007.
 
 From time
to time we need working capital when we do not have funds to pay for lot
development or general and administrative expenses. During the three months
ended December 31, 2007, the company had secured minor financing of $12,000 by
two independent individuals to help pay some operating
obligations.  We cannot assure that such funding will be available in
the future.
 
 The
timing of the completion of the platting of our Spanish Trails project is not
certain, so we cannot assure the timing of cash flow from lot sales. Thus, we
may be faced with a working capital shortage. In that event we may be required
to seek financing which may not be available or, if available, it could be on
terms which are cost prohibitive to us.
 
 In
addition, we now expect to begin building homes on our Spanish Trails project in
mid 2008. This initiative will require working capital which we cannot assure
will be available. We are pursuing debt financing for this
endeavor.
 
 Most of
our costs are incurred in the initial phases of our real estate projects. Our
profitability depends upon our ability to develop, manage and sell real estate
projects on a timely basis and to control our costs. We expect that we will
develop a more consistent pipeline of activity as we mature and, thereby, a more
consistent source of revenues and profit. If we succeed in this effort and
generate sufficient revenues, we will expect to be profitable. However, we
cannot assure that we will be profitable.
 
 We do not
intend to pay dividends for the foreseeable future. We do not expect our
revenues to be impacted by seasonal demands.
 
 Recently Issued Accounting
Pronouncements
 
 We do not expect the adoption of any recently issued accounting pronouncements
to have a significant impact on our net results of operations, financial
position, or cash flows.
 
  -
22 -
  Critical Accounting
Policies
 
 The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires us to make a number of estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements. Such estimates and
assumptions affect the reported amounts of revenues and expenses during the
reporting period. On an ongoing basis, we evaluate estimates and assumptions
based upon historical experience and various other factors and circumstances. We
believe our estimates and assumptions are reasonable in the circumstances;
however, actual results may differ from these estimates under different future
conditions.
  We believe that the estimates and assumptions that are most important to the
portrayal of our financial condition and results of operations, in that they
require our most difficult, subjective or complex judgments, form the basis for
the accounting policies deemed to be most critical to us. These critical
accounting policies relate to bad debts, impairment of intangible assets and
long lived assets, contractual adjustments to revenue, and contingencies and
litigation. We believe estimates and assumptions related to these critical
accounting policies are appropriate under the circumstances; however, should
future events or occurrences result in unanticipated consequences, there could
impact on our future financial conditions or results of operations.
 
 
 ITEM
3. CONTROLS AND PROCEDURES
 
 Management
is responsible for establishing and maintaining adequate internal control over
financial reporting. As of the end of the period covered by this report, our
chief executive officer and our chief financial officer evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Rule 13a-15b under the Securities Exchange Act of 1934.
Based on their review of our disclosure controls and procedures, they have
concluded that our disclosure controls and procedures are effective in timely
alerting each of them to material information relating to us that is required to
be included in our periodic SEC filings. Since our Company has been acquired as
a result of the Sierra Norte acquisition discussed above, and a new board and
management has been installed, we have been able to timely file our Form 10-QSBs
and our Form 8-Ks. Management is in the continuing process of analyzing and
adopting new policies and procedures to improve the design and operations of our
disclosure controls, We acknowledge that a change with respect to financial
controls has been made to alert us with respect to funding provided by related
parties and that the changes in disclosure controls, particularly recognizing
Form 8-K events, are ongoing. We expect these changes in internal controls will
have a significant effect on our disclosure controls after the evaluation date
and the date of this report.
  -
23 -
  
 Changes
to Internal Controls include a reorganization of available staff to better
segregate duties, acquisition and implementation of more sophisticated
accounting software and a personnel plan to hire additional accounting and
administrative staff. We continue to schedule training for employees and
management in critical areas to enhance their ability to perform the duties
assigned to them.
 
 (a) 
Disclosure Controls and Procedures
  The
Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including the Company's Chief
Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the
effectiveness of the Company's disclosure controls and procedures. Based upon
that evaluation, the CEO and CFO concluded that as of December 31, 2007 our
disclosure controls and procedures were effective in timely alerting them to the
material information relating to the Company required to be included in the
Company's periodic filings with the SEC, subject to the various limitations on
effectiveness set forth below under the heading, "LIMITATIONS ON THE
EFFECTIVENESS OF INTERNAL CONTROLS," such that the information relating to the
Company, required to be disclosed in SEC reports (i)is recorded, processed,
summarized and reported within the time periods specified in SEC rules and
forms, and (ii) is accumulated and communicated to the Company's management,
including our CEO and CFO, as appropriate to allow timely decisions regarding
required disclosure.
  (b)
Changes in Internal Controls over financial reporting
  Changes
in internal control over financial reporting. There has been no change in the
Company's internal control over financial reporting that occurred during the
fiscal quarter ended December 31, 2007 that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.
  (c)
Limitations on Effectiveness of Disclosure Controls and Procedures
  The
Company's management, including the CEO and CFO, does not expect that our
disclosure controls and procedures or our internal control over financial
reporting will necessarily prevent all fraud and material error. An internal
control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met. Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within the Company have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of simple
error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people, or by management
override of the internal control. The design of any system of controls also is
based in part upon certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions. Over time, control may
become inadequate because of changes in conditions, and/or the degree of
compliance with the policies or procedures may deteriorate.
 -
24 -
 
 PART
II. OTHER INFORMATION
 
 ITEM
1. LEGAL PROCEEDINGS
 
 There are
no legal proceedings, to which we are a party, which could have a material
adverse effect on our business, financial condition or operating results.
However, a former attorney has filed a complaint and obtained a default judgment
against us for fees and costs in the approximate amount of $ 47,000. We believe
that the judgment will be reversed and we will enter into arbitration with the
attorney. We have included $38,000 in these financial statements.  The
costs assessed by the attorney for arbitration of approximately $ 9,000 is
not included.
  
 ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
 
 On October 8, 2007 the Company issued
350,000 restricted shares at $0.45 to Redwood Consulting, LLC pursuant to their
consulting contract valued at $ 157,500.
   ITEM
3. DEFAULTS UPON SENIOR SECURITIES
 
 None.
 
 
 ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
 None
 
 ITEM
5. OTHER INFORMATION
 
 None
 
  -
25 -
  ITEM
6. EXHIBITS AND REPORTS ON FORM 8-K
 
 a.
Exhibits
 
 Exhibit
                No.
              
              Description2.1
              
              Agreement
      and Plan of Reorganization - Pocketspec Technologies, Inc. and Sierra
      Norte LLC (a)2.2
              
              Acquisition
      Agreement - Pocketspec Technologies, Inc. and Spanish Trails, LLC
      (b)3.1
              
              Articles
      of Incorporation of Falcon Ridge Development, Inc. previously
      filed.3.2
              
              Bylaws
      of Falcon Ridge Development, Inc. previously filed.3.3
              
              Articles
      of Organization of Sierra Norte, LLC previously filed.3.4
              
              Operating
      Agreement of Sierra Norte, LLC previously filed.3.5
              
              Articles
      of Organization of Spanish Trails, LLC previously
filed.3.6
              
              Operating
      Agreement of Spanish Trails, LLC previously filed.4.1
              
              Articles
      of Amendment - Establishment of Series of Preferred Stock previously
      filed.10.1
              
              Purchase
      Agreement - Spanish Trails, LLC and D.R. Horton* (Confidential portions of
      this agreement noted by *** have been omitted and filed separately with
      the Securities and Exchange Commission pursuant to a request for
      confidentiality under Rule 24b-2 of the Securities Exchange Act of 1934.)
      Previously filed.10.2
              
              Promissory
      Note - Karen Y. Duran - Sierra Norte, LLC - May 20, 2006 - $150,000
      previously filed.10.3
              
              Promissory
      Note - Karen Y. Duran - Sierra Norte, LLC - June 1, 2006 - $200,000
      previously filed.10.4
              
              Promissory
      Note - Karen Y. Duran - Sierra Norte, LLC - June 19, 2006 - $66,000
      previously filed.14.1
              
              Code
      of Ethics previously filed.21.1
              
              List
      of Subsidiaries previously filed.23.1
              
              Consents
      of experts31.1
              
              Certification
      of Chief Executive Officer pursuant to Rule
      13a-14(a)/15(d)-14(a)*31.2
              
              Certification
      of Chief Financial Officer pursuant to Rule
      13a-14(a)/15(d)-14(a)*32.1
              
              Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002*32.2
              
              Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002*99
              
              Additional
      Exhibits - None
 ______________
 * Filed
herewith.
 
 (a)
              Filed
      on May 25, 2006 as Exhibit 2.1 with the Registrant's Current Report on
      Form 8-K and incorporated herein by
reference.
 
 (b)
              Filed
      on July 8, 2006 as Exhibit 10.19 with the Registrant's Current Report on
      Form 8-K and incorporated herein by
reference.
 ______________
 b.
 None.
  -
26 -
 
 
 SIGNATURES
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
 
 
 
 Falcon
      Ridge Development, Inc.Dated:
      February 18, 2008
              By:
              /s/
      Fred M. MontanoFred
      M. MontanoPresident,
      Chief Executive Officer, and DirectorDated:
      February 18, 2008
              By:
              /s/
      Karen Y. DuranKaren
      Y. DuranVice
      President, Treasurer and Chief Financial Officer
 
  -
27 -
   EXHIBIT
INDEX
 
 Exhibit
                  No.
                
                Description2.1
                
                Agreement
      and Plan of Reorganization - Pocketspec Technologies, Inc. and Sierra
      Norte LLC (a)2.2
                
                Acquisition
      Agreement - Pocketspec Technologies, Inc. and Spanish Trails, LLC
      (b)3.1
                
                Articles
      of Incorporation of Falcon Ridge Development, Inc. previously
      filed.3.2
                
                Bylaws
      of Falcon Ridge Development, Inc. previously filed.3.3
                
                Articles
      of Organization of Sierra Norte, LLC previously filed.3.4
                
                Operating
      Agreement of Sierra Norte, LLC previously filed.3.5
                
                Articles
      of Organization of Spanish Trails, LLC previously
filed.3.6
                
                Operating
      Agreement of Spanish Trails, LLC previously filed.4.1
                
                Articles
      of Amendment - Establishment of Series of Preferred Stock previously
      filed.10.1
                
                Purchase
      Agreement - Spanish Trails, LLC and D.R. Horton* (Confidential portions of
      this agreement noted by *** have been omitted and filed separately with
      the Securities and Exchange Commission pursuant to a request for
      confidentiality under Rule 24b-2 of the Securities Exchange Act of 1934.)
      Previously filed.10.2
                
                Promissory
      Note - Karen Y. Duran - Sierra Norte, LLC - May 20, 2006 - $150,000
      previously filed.10.3
                
                Promissory
      Note - Karen Y. Duran - Sierra Norte, LLC - June 1, 2006 - $200,000
      previously filed.10.4
                
                Promissory
      Note - Karen Y. Duran - Sierra Norte, LLC - June 19, 2006 - $66,000
      previously filed.14.1
                
                Code
      of Ethics previously filed.21.1
                
                List
      of Subsidiaries previously filed.23.1
                
                Consents
      of experts31.1
                
                Certification
      of Chief Executive Officer pursuant to Rule
      13a-14(a)/15(d)-14(a)*31.2
                
                Certification
      of Chief Financial Officer pursuant to Rule
      13a-14(a)/15(d)-14(a)*32.1
                
                Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002*32.2
                
                Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002*99
                
                Additional
      Exhibits - None
 ______________
 * Filed
herewith.
 
 (a)
                Filed
      on May 25, 2006 as Exhibit 2.1 with the Registrant's Current Report on
      Form 8-K and incorporated herein by
reference.
 
 (b)
                Filed
      on July 8, 2006 as Exhibit 10.19 with the Registrant's Current Report on
      Form 8-K and incorporated herein by
reference.
 ______________